SCOPE
A. This policy covers all Salesand Service of Educational Activities (SSEAs), defined below, to internal andexternal entities, and is intended for all departments or units operating an SSEAactivity, as well as those departments involved in the review of SSEA&s andtheir rates.
B. The followingactivities are not considered as defined SSEAs and are not subject to thispolicy:
1. Auxiliaries and activitiesthat rely on rates subject to a review and approval process external to theUniversity as specified in the BFB A-47 and UC San Diego Self-Supporting ActivityGuidance.
2. Services or functionsof a department that are within the scope of their core-funded (typicallyGeneral Fund or Student Services Fee supported) activities.
3. Activities that involvea one-time distribution or transfer of expenses (see BFB A-47), or activities thatserve only one customer.
4. Activities that containcharges that cannot be readily calculated on per unit or per hour basis, orwhere the goods or services is not offered on a recurring basis to more thanone customer.
POLICY SUMMARY
This policy isestablished to provide consistent operational practices amongst the various SSEAs,to ensure compliance with both University accounting policies and governmentregulations and provide equitable treatment of all users regardless of fundingsource. This policy establishes a mechanism for defining and managing definedSSEAs along with developing appropriate charge rates. Charge rates areestablished to allow activities to recover direct and Indirect Costs for goodsand services provided to extramural and University funded activities as well asthe same goods or services provided to external entities.
The activities definedunder these policies and procedures must reflect government regulatory costingprinciples such as those contained in the Office of Management and Budget (OMB)Uniform Guidance. Additionally, effective December 2014, the University becamesubject to four Cost Accounting Standards (CAS). These standards requireUniversities that receive $50 million or more in Federal awards over the courseof their fiscal year to follow consistent cost accounting practices throughoutthe institution. Therefore, SSEA policies and practices have been establishedto provide consistent operational practices among the various internal Rechargeor external Sales and Service Activities, and to ensure compliance with bothgovernment regulations and University accounting policies.
DEFINITIONS
A. Auxiliary Enterprise -self-supporting activities which provide non-instructional support in the formof goods and services to students, faculty, and staff upon payment of aspecific user charge or fee for the goods and services provided (e.g.,bookstore, parking, housing, dining, and hospitality services). The generalpublic may be served only incidentally.
B. Compliance Review - areview that validates that the Recharge Activity and rate methodology arecompliant with University of California (UC) and federal polices, regulations,and requirements.
C. Control Point -cognizant Vice Chancellor&s office.
D. Depreciation - thedecline in an items& value due to factors such as age and use.
E. Differential Income -The rate applied to all sales to non-UC users of activities in order to recoverthe Indirect Costs related to the activity. Information for the Health Sciences(HS) Differential Income application can be found on the UC San Diego HS ServiceAgreements webpage.
F. Direct Costs - coststhat can be specifically identified with a SSEA and that can be directlyassigned to such activities relatively easily and accurately.
G. External Users - Userswho do not account for their transactions through the University&s accountingsystems (i.e., Recharge), including faculty, staff, students, and patientspaying from their own personal funds.
H. Financial Review - areview that evaluates the financial viability of a proposed Recharge whenproposing the Recharge function and cost recovery mechanism.
I. Functional Review - areview that evaluates the need for the services to ensure efficient utilizationof department resources and proposal for completeness.
J. Indirect Costs - Costsof conducting business that cannot be identified readily and specifically witha particular activity.
K. Internal Users - Userswho account for their transactions through the University&s accounting systemsvia Recharge or other financial journals. Other UC campuses are considered InternalUsers and should be charged the internal rate via intra-campus journals.
L. Labor ClearingActivities - An activity which redistributes personnel and related costs tomultiple funding sources within a specific department in circumstances whichotherwise would require complex, split-funded payroll transactions, using Rechargemethodology. A typical Labor Clearing fund involves investigators andtechnicians whose effort from month to month directly benefits numerouscontacts and grants in varying amounts. Labor Clearing funds must adhere to University of California Office of the President(UCOP) Policy BFB A-47 and UC San Diego Self-Supporting ActivityGuidance.
M. Office with FinalApproval - the office authorized to complete the final approval on theestablishment or modification to a SSEA.
N. Other Income ProducingActivities - Any Recharge or Other Income Producing Activity that cannot beclassified as an Auxiliary Enterprise, Recharge Activity, or Labor Clearingactivity. Examples include real property rental activities, royalty incomeactivities, orientation programs, and departmental conference programs. OtherIncome Producing Activities must adhere to UCOP Policy BFB A-47 and UC San Diego Self-Supporting ActivityGuidance.
O. Program Income - grossincome earned by a grantee, a consortium participant, or a contractor under agrant that was directly generated by the grant-supported activity or earned asa result of the award.
P. Recharge - a method ofinternal cost redistribution between campus units and departments providing andreceiving goods and services.
Q. Recharge Activity - an activitythat provided specific, ongoing, repetitive goods or services to campus unitson a fee basis. Sales and services provided to an external entity are notachieved by the internal Recharge mechanism. Rather charges and revenue areprocessed by a billing invoice and a cash receipt or credit card transaction.
R. Recharge AdvisoryCommittee - an advisory committee and may be appointed to address policyrelated issues, recommend resolution of any disputes, and/or help ensureconsistent treatment and adequate oversight.
S. Sales and Service ofEducational Activity (SSEA) - a self-supporting activity established for theprimary purpose of providing goods and/or services to the University communityfor a fee. Activities not considered to be SSEAs are outlined in listed underthe Scope section B.2. of this policy.
T. Service Agreement -Written legal contracts between the University and external sources containingterms and conditions under which goods and/or services are to be furnished bythe University. Service Agreements are normally issued by approved Rechargeactivities for ongoing or continuous goods and/or services. Service Agreementscan be issued by non-Recharge activities for one-time or occasional sales ofgoods and/or services.
U. Specialized ServiceFacilities (SSF) - a specific type of Recharge Activity defined in the Officeof Management and Budget, Uniform Guidance,section 200.468.Rates for SSFs incorporate all applicable costs including overhead. Theestablishment of such a facility requires coordination with the originatingdepartment, division&s administrating offices, the Costing Policy &Analysis (CP&A), and the Campus Budget Office (CBO).
V. User Committee - Acommittee that includes representatives of the largest users of the RechargeActivity plus the Recharge Activity&s manager. Based on information obtained inthe proposal, Recharge Activities with a budget of at least $500,000 mayrequire a User Committee to review and recommend approval of the developed ratestructure proposed by the activity, as well as both the type and level ofservices being provided.
POLICY STATEMENT
A. Criteria forEstablishing and Operating an SSEA
A University department may establish anSSEA for cost recovery of goods or services that cannot effectively be met byan alternative source or by a non-university provider. The Department mustconsider the following criteria when establishing an SSEA.
1. Goods and/or serviceswill be provided on a regular and continuing basis to more than onedepartment/unit/activity.
2. Separate costs andbudgets can clearly be defined for these activities.
3. Rates can be stated inmeasurable units of goods or services.
4. Rates are developed toaccount for full cost recovery, including depreciation and net of any approvedsubsidy.
5. Rates are calculated ona breakeven financial basis.
6. Costs recovered inrates are allowable, reasonable, necessary, and consistently treated inaccordance with University policy and procedures and government regulations.
7. Rates do notdiscriminate for or against any university clients. Units may develop ratesthat take into consideration things such as high volume or less-demanding work;however, units must make these rates available to all clients who meet thespecific criteria.
8. Approved rates arepublished or made readily available.
B. Capital Equipment.
Per Uniform Guidancesection 200.439,the cost of purchasing Capital Equipment, defined in BFB BUS-29, cannot be chargeddirectly to Recharge activities. Capital Equipment purchases must be fundedfrom other sources, including equipment reserves, gift funds, or otherunrestricted fund sources.
Capital Equipment shall be depreciatedand the Depreciation expense included as a cost in the rate development. In certaincircumstances, the recovery of Capital Equipment Depreciation in Recharge ratesmay be waived. The waiver can only be applied to the rate for UC customers anda rationale for the waiver must be provided as part of the proposal.
Exceptions to Capital Equipment Depreciationinclusion in rates are as follows:
1. Capital Equipmentfunded by the Federal government or is identified as cost sharing to a federalproject.
2. Capital Equipmentfunded by an award under a private contract and the contract is not completed.
C. Subsidizing SSEAs.
At the discretion of the originatingdepartment and with the approval of the appropriate Control Point, SSEAs may besubsidized from funding sources other than the SSEA provided:
1. The subsidy does notdiscriminate between users; and
2. The amount, fundingsource, and purpose of all subsidies are disclosed in the rate proposal. Moreinformation on subsidies can be found in the UC San Diego Self-Supporting Activity Guidance.
D. Sales to ExternalUsers.
SSEAs provided to External Users shall berelated to the University&s mission of teaching, research, or public service,and shall not impair services to Internal Users.
1. If services areprovided to External Users, the unit must recover Indirect Costs by assessingthe Differential Income (DI). Units may include a markup in excess of Directand Indirect Costs if the full DI is already being assessed.
2. Activities involvingfederal contracts and grants collect Indirect Costs via the Facilities andAdministrative (F&A) cost rates negotiated between UC San Diego and theDepartment of Health and Human Services.
3. Externalrevenue generated by activities or programs not substantially related to theUniversity&s tax-exempt functions is considered unrelated business income andsubject to federal income taxation. Examples include revenue from CALIT2 Nanoand Campus Research Machine Shop. (see policy BFB A-61: Unrelated BusinessIncome and Expenses)
E. Program Income fromSSEAs.
SSEAs receiving funding from external orsponsored sources might be considered as Program Income Activities. Program Incomemay be used only for allowable costs in accordance with the applicable costprinciples and the terms and conditions of the award.
Program Income includes, but is notlimited to:
1. Income from fees forservices performed
2. Charges for the use orrental of real property
3. Equipment or suppliesacquired under the grant
4. The sale of commoditiesor items fabricated under an award
5. Charges for researchresources
6. Registration fees forgrant-supported conferences
7. License fees and royaltieson patents and copyrights
F. SSEA Reserves.
SSEAs may establish and make provisionsfor certain types of reserves as defined in the University of CaliforniaAccounting Manual or this policy guidance and procedures manual. Examples ofsome allowable reserves are to accumulate reserve funds for Capital Equipmentrenewal and replacement, and facility renovations or surplus external revenue. Anyreserves in a SSEA must conform to applicable University policies andgovernmental regulations, and be documented in the Recharge proposal andaccounted for according to procedures prescribed by the Controller&s Office andBudget & Financial Analysis Office. Any reserves, set-asides, or transfersnot in accordance with policies and regulations (e.g., those for contingenciesor expansion) are unallowable.
G. SSEA ConflictResolution.
Conflicts between the SSEA and itsuser(s) may arise in some circumstances, such as when an ideal service item innot clearly identifiable and measurable, or when the benefit received by thecustomer of the costs involved in production of the service item are not easilydiscernable. Resolution of such conflicts should be attempted by firstapproaching the department heads, then the appropriate Dean or Vice Chancellor.BFA - Costing Policy & Analysis is available for consultation throughoutthe conflict resolution process. If the conflict remains unresolved, it will beforwarded for review to the Recharge Advisory Committee.
H. SSEA Exceptions toPolicy.
Costing Policy & Analysis and/or theRecharge Advisory Committee may grant exceptions to this policy, or to specificprovisions of this policy when such an exception can be fully justified or isnecessary based on an operational exigency or other institutional priority.
RESPONSIBILITIES
A. Originating Department - the unitimplementing and managing the operations of the SSEA.
1. Develops thejustification, rates, proposals, and budget for the SSEA.
2. Manages the activity torecover the full Direct Costs of providing the goods and services through an allowable,reasonable, identifiable rate to ensure the activity operates on a breakevenbasis.
3. All revenues andexpenses for the SSEA must be recorded at a minimum monthly, in sufficientdetail, and in accordance with University accounting policy in an establishedchartstring, which is to be used exclusively for that activity.
4. Expendituresto revenue reconciliation must be performed at least annually to determine anynecessary rate adjustments in accordance with the UC San Diego Self-Supporting ActivityGuidance. Every effort should be made to ensure theyear-end surpluses or deficit does not exceed two months of the SSEA&s annualexpenditures. Significant surplus or deficit balances can be amortized over aperiod of several fiscal years with prior CP&A approval, and projectedyear-end surplus or deficit balances must be included in subsequent year ratecomputations. Specific policy and procedures related to UC San Diego&s Fund Management(Overdraft) policy (PPM 300-2).
5. Ensures that only the RechargeActivity&s own revenues/Recharge income and expenses are recorded in theoperating fund project(s).
6. Submits all SSEAproposals and requests to cognizant Vice Chancellor&s office for review andapproval.
7. Maintains current rateinformation in the accounting system.
8. Records and maintains CapitalEquipment in the asset management system that include depreciation of capitalassets per University policy PPM522-1.
9. Performs annual CapitalEquipment Depreciation and Differential Income transfers, as specified in the UC San Diego Self-Supporting ActivityGuidance.
10. Bills customers forservices performed on a monthly basis or other approved schedule in accordancewith the UC San Diego Self-SupportingActivity Guidance,and maintains records to substantiate Recharge and other billing transactions,including requisitions, purchase orders, or similar written verification ofindividual user requests for goods or services.
11. Responsible for theresolution of comments, questions, and objections to proposal and annualreview.
12. Maintains originaldocumentation related to the establishment, modification, or termination of Rechargeactivities.
B. Cognizant DepartmentChair or Administrative Unit Head
1. Endorses the proposalfrom Originating Department .
2. Forwards proposal tothe Cognizant Vice Chancellor's Office.
3. Reviews and endorsesrequests for Capital Equipment Depreciation waivers, Differential Incomewaivers and Differential Income exemptions.
4. Forwards requests for CapitalEquipment Depreciation, Differential Income waivers and Differential Incomeexemptions to the cognizant Vice Chancellor.
5. Responsible for thebusiness management functions, such as budget control and the receipt, custody,and disbursement of revenues, accounting and financial reporting; andprocurement of supplies, equipment, and services.
6. Responsible for anyunfunded deficits of the activity.
7. Participate inresolution of comments, questions, and objections to proposal and annualreview.
C. Cognizant ViceChancellor&s Office (Control Point)
1. Ensures proposed andexisting SSEA conform to all University policies and regulations.
2. Performs Functional Reviewand, based on SSEA Review Matrix, endorses or approves proposals for both newrates and modifications to existing rates for SSEA.
3. Reviews and endorsesrequests for Capital Equipment Depreciation waivers, and Differential Income exemptions.
4. Review and finalapprove Differential Income waivers.
5. Maintains documentationrelated to the establishment, modification, or termination of SSEA under theirpurview.
6. Recommends arepresentative to serve on the SSEA or Recharge Advisory Committee.
7. Responsible for anyunfunded deficits of the activity.
D. Business and FinancialServices (BFS) - Internal Controls and Accounting (ICA) & FinancialOperations
1. Establishes andmaintains Chart of Accounts (CoA) and other necessary General Accountingelements.
2. Ascertains whetheractivities are subject to unrelated business income tax and if applicable,submit financial worksheets to UCOP for inclusion in the consolidated incometax return.
E. Budget and FinancialAnalysis (BFA) - Costing Policy & Analysis (CP&A) Office
1. Owns and maintains thispolicy (PPM 300-87).
2. PerformsAdministrative, Financial, and Compliance Reviews based on the SSEA ReviewMatrix and compiles approval packages for establishing or modifying SSEA rates.
3. Participates inresolution of comments, questions and objections relating to SSEA proposal.
4. Reviews and approvesrequests for Capital Equipment Depreciation waivers, and Differential Income exemptions.
5. Maintains a schedule ofSSEA, review periods, website, and training resources for Recharge activities.
6. Completes annual reviewof SSEAs& annual surplus and deficit balances, and expense and revenuetransactions.
7. Prepares and distributesan annual monitoring report summary to department managers and Vice ChancellorOffice's comparing existing Recharge activities with approval status andvarious transactions recorded in the Project Portfolio Management (PPM)/GeneralLedger (GL) (e.g., Depreciation transfers, surplus/deficit balances,unallowable expenses, percent of federal funds Recharged, etc.)
8. Provides recommendationsand requests to the BFA-AVC on SSEAs, including Service Agreements, and exceptionsto policy.
9. Provides policyinterpretations and guidance for individuals/units responsible for preparing Rechargeproposals.
10. Coordinates and consults,as necessary, with the Recharge Advisory Committee and/or Campus Budget Office (CBO)for campus input and recommendations on policy, procedures, waivers,exceptions, rate approvals, and retirement of activities.
11. Reserves the right toperform reviews of any SSEA, regardless of the review schedule, to ensure theactivity complies with the policies and procedures associated with Rechargeactivities.
F. Recharge Advisory Committee
1. Upon request, mayperform a User Committee review and endorses proposals for both new rates andmodifications to existing rates for SSEA.
2. Acts as an advisory committee,and be appointed to address policy related issues, recommend resolution of anydisputes, and/or help ensure consistent treatment and adequate oversight.
G. Budget and FinancialAnalysis (BFA) - Campus Budget Office (CBO)
1. Collaborates and makes recommendationswith Business and Financial Services - Costing Policy & Analysis (BFS-CP&A)on Differential Income (DI) exceptions to policy requests.
H. Budget and FinancialAnalysis (BFA) - Associate Vice Chancellor (AVC)
1. Designated as the UCSan Diego final approver for all SSEA requests, to ensure the activity complieswith the policies and procedures associated with Recharge activities, asoutlined in the Delegation of Authority.
2. Approves of exceptionsto policy (Capital Equipment Depreciation, Differential Income, etc.), SSEAs rates,and Service Agreements.
I. Vice Chancellor ChiefFinancial Officer
1. Provides final approvalof administrative overhead recovery exceptions as outlined in the Delegation ofAuthority.
2. Delegates SSEAadministrative overhead recovery exceptions final approver responsibilities tothe BFA Associate Vice Chancellor, as outlined in the Delegation of Authority.
3. Reserves the right toact as the final approver for administrative overhead recovery exceptions.
PROCEDURES
UC San Diego SSEAprocedures are detailed in the Self-SupportingActivity Guidance on Blink. The guidance provides information, guidelines,and resources related but not limited to establishing a new rate, modificationsto rates, closing SSEAs, and managing SSEAs. Blink provides SSEA/rechargeadministrators with the information and resources needed to support this policyand operate Self-Supporting Activities in compliance with current UC, UC San Diegoinstitutional and federal policies.
FORMS
Proposal templates andmaterials are available on the Blink Self-Supporting page at:
https://blink.ucsd.edu/finance/costing-analysis/ssa/forms-templates/index.html
RELATED INFORMATION
A. University ofCalifornia Office of the President Business and Finance Bulletins:
1. BFB A-47: Direct Costing Procedures
2. BFB A-56: Academic Support Unit Costingand Billing Guidelines
3. BFB A-59: Costing and Working Capitalfor Auxiliary and Service Enterprises
4. BFB A-61: Unrelated Business Income andExpenses
B. UC San Diego Policy andProcedure Manuals and Other Resources:
1. UC San Diego PPM 300-2 Funds Management(Overdraft) Policy
2. UC San Diego PPM 522-1 PropertyInventory Control System Operating Procedures
3. UC San Diego HealthSciences Service Agreements
C. Federal Regulations,Uniform Administrative Requirements, Cost Principles, and Audit Requirementsfor Federal Awards
D. National Center forResearch Resources, Cost Analysis and Rate Setting Manual for Animal Research Facilities
E. OMB Uniform GuidanceSection 200.307 Program Income
F. OMB Uniform GuidanceSection 200.468 Specialized Service Facilities
G. OMBUniform Guidance section 200.439 Equipment and Other Capital Expenditures
H. Cost AccountingStandards (CAS) & Disclosure Statement (DS-2)
FREQUENTLY ASKEDQUESTIONS (FAQ&S)
A. Additional informationand materials are available on blink at: UC San Diego Self-Supporting Activity Guidance.
B. Additional questionscan be directed to Recharge@ucsd.edu or the FinancialAnalysis Office.
REVISION HISTORY
2025/07/01 Updated to reflect the transition to the new financialsystem and revised delegation of authority structure.
2019/07/12 This newpolicy was drafted to provide guidance to campus departments regardingself-supporting activities.
